Markets had greeted the decision to go to the polls with euphoria, pushing sterling above $1.30 as May’s poll lead over the Labour party grew.

However, the faltering election campaign followed by the loss of the Conservative party majority has since sent sterling lower against major currencies.

The pound enjoyed a brief rally at the end of last week after three hawks on the rate-setting monetary policy committee (MPC) voted for the Bank to raise its key interest rate, the closest the economists had come to a rate hike in six years.